Construction work hours fell 1.2% in October, average hourly wages fell $0.03 and the average weekly wage declined $3.40. The Monster.com index of online construction job postings dropped nearly 3%, the fifth consecutive decline. Homebuilders dropped 8,000 jobs and nonresidential builders cut 4,000 jobs. Heavy contractors reduced employment by 4,000 jobs.  13,000 jobs were lost at nonresidential and heavy subcontractors and 19,000 jobs were lost at residential subcontractors. This pattern suggests that lots of maintenance work was deferred last month.

Construction job cuts in the coming months should average over 20,000, although November and December are likely to have much larger job losses.  12,000 jobs will be cut every month if construction labor productivity expands at modest 2% annual rate. About 8,000 jobs a month will be lost due to the reduced volume of construction work forecast.

Architectural firms dropped only 400 jobs and still employ 7,000 more people than a year ago. Larger cuts are almost certain very quickly.  This will happen as projects in development are deferred or cancelled including the large share of work now being done for Middle Eastern and Asian Pacific projects.

Contractors should expect better labor availability and lower wage growth into 2010 than they were planning for a few months ago. But specialized skills will still be in short supply in the most active construction markets. Apprenticeship programs can not fully replace the retiring skilled tradesman even with now lower total labor demand.

October’s ugly labor report for the overall economy masks the continued rapid gains in fixing the financial market problems that set off the wave of layoffs. Credit access for creditworthy borrowers in all industries has improved significantly in the last month. Faster improvement are likely over the next month as many of the announced public cash injections into the credit market are beginning in November.  Already, the volume of commercial paper has expanded and the premiums charged to less creditworthy borrowers has been more than halved from a month earlier. The financial market is not yet back to normal but the lack of credit access and high borrowing are no longer adding significantly to spending cutbacks across the economy.

 

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